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Exhibit 3
XXXXXXXX CONVERTIBLE FUND, INC.
Investment Advisory Agreement
August 1, 1996
(Finalized October 25, 1996)
XXXXX-XXXXXXXX MANAGEMENT COMPANY
00 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Gentlemen:
The undersigned, Xxxxxxxx Convertible Fund, Inc., a Delaware corporation (the
"Company"), is an investment company registered under the Investment Company Act
of 1940 (the "Act"). The Company is a diversified closed-end investment company,
and invests and reinvests its assets. The Company hereby engages you to act as
its Investment Adviser and to supervise certain of its affairs, subject to the
terms and conditions herein set forth.
Section 1. Advisory Services. The Company will from time to time
furnish to you detailed statements of its investments and resources and
information as to its investment needs, and will make available to you such
financial reports, proxy statements, legal and other information relating to its
investments as may be in the possession of the Company or available to it. You
shall, at your expense, furnish to the Company, at the regular executive offices
of the Company, continuing investment information, advice and recommendations
with respect to the purchase and sale of investments and the making of
commitments with respect thereto. In giving such advice and making such
recommendations, you shall be guided by the Company's investment policy as
delineated by the statements contained in the various documents filed with the
Securities and Exchange Commission as such documents may from time to time be
amended. You shall place at the disposal of the Company such statistical,
research, analytical and technical services, information and reports as may
reasonably be required. Your advice and recommendations with respect to the
purchase and sale of investments and the making of investment commitments shall
be submitted at the principal office of the Company to an officer or officers of
the Company designated for that purpose by the Board of Directors of the
Company. Such officer or officers shall have, subject to the control of the
Company's Board of Directors, sole responsibility for investment decisions, and
full authority to act upon your advice and recommendations and to place orders
on behalf of the Company for the purchase and sale of portfolio securities.
Reports of portfolio transactions shall be made monthly to the Board of
Directors of the Company.
Section 2. Independent Contractor. You shall, for all purposes hereof,
be deemed to be an independent contractor and shall have no authority to act for
or represent the Company unless otherwise provided. No agreement, bid, offer,
commitment, contract or other engagement entered into by you, whether on your
behalf or whether purported to have been entered into on behalf of the Company,
shall be binding upon the Company, and all acts authorized to be done by you
under this contract shall be done by you as an independent contractor and not as
agent.
Section 3. Expenses. To the extent described in this Section 3, you
shall provide the Company with office space and facilities, pay
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the salaries of its executive officers and furnish clerical, bookkeeping and
statistical services to the Company.
The Company will pay all expenses incurred by it and not assumed by you
including, but not by way of limitation, expenses in connection with its
organization and with the offering of its securities; fees and expenses of its
unaffiliated directors; salaries of employees other than executive officers; the
compensation and related personnel expenses of the Treasurer of the Company and
all personnel working under the Treasurer's direction and the expenses of office
space, facilities, and equipment used by the Treasurer and such personnel in
performance of their duties to the Company in an aggregate amount not to exceed
$50,000 per year; legal and accounting fees, fees of custodian, registrar,
transfer agents and dividend disbursing agents; taxes, interest, brokerage
commissions; direct costs of postage, printing, copying and travel expenses
attributable to the conduct of the business of the Company, etc. You shall
assume and pay all expenses incurred by you in performance of this contract.
Section 4. Compensation. As compensation for these services, the
Company will pay to you on the last day of each month a fee for such month
computed at an annual rate of 3/4 of 1% of the first $100,000,000 and 1/2 of 1%
of the excess over $100,000,000 of the Company's net asset value in such month,
subject to reduction as follows: the annual fee payable shall be reduced to the
extent the Company's ordinary expenses for the year (including your fee but
excluding interest, local, state and Federal taxes on the Company and
extraordinary items) exceed 1.5% of the first $100,000,000 and 1% of the excess
over $100,000,000 of the average of the monthly net asset values of the Company
for the twelve months of such year. You will promptly refund any amount
theretofore paid in excess of the fee determined to be due for such year. For
the purpose of calculation of the fee, the net asset value for a month will be
the average of the Company's net asset values at the close of business on the
last business day on which the New York Stock Exchange is open in each week in
the month. The determination of what constitutes an "extraordinary item" rather
than an ordinary expense shall be conclusively determined by the directors of
the Company who are not "interested persons" of either the Company or you, as
defined by the Act.
If this contract shall become effective subsequent to the first day of
a month, or shall terminate before the last day of a month, your compensation
for such fraction of the monthly period shall be determined by applying the
foregoing percentage to the net asset value of the Company during such fraction
of a monthly period (which net asset value shall be determined in such
reasonable manner as the Board of the Company shall deem appropriate) and in the
proportion that such fraction of a monthly period bears to the entire month.
Compensation under this contract will begin to accrue on its effective
date.
Section 5. Approval of Contract; Termination. This contract will be
submitted to the Company's shareholders for approval. If approved by the vote of
a majority of the Company's outstanding shares of common stock as defined in the
Act, the contract will be in effect from the date of approval. Unless terminated
by either party, this contract will continue in force from year to year so long
as the continuance is specifically approved at least annually either (i) by the
Board of Directors of the Company or (ii) by the vote of a majority of the
outstanding voting securities of the Company as defined in the
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Act, provided that in either event the contract is also approved by the vote of
a majority of the directors of the Company who are not interested persons, as
defined in the Act, of the Company or of you, cast in person at a meeting called
for the purpose of voting on such approval. The contract is terminable without
penalty by either party on sixty days' written notice and will terminate
automatically in the event of any assignment.
Except as specified above, this contract may not be amended,
transferred, assigned, sold or in any other manner hypothecated or pledged;
provided, that this limitation shall not prevent any minor amendments to the
contract which may be required by Federal or state regulatory bodies.
Section 6. Liability. You shall give the Company the benefit of your
best judgment and efforts in rendering the services set forth herein, and the
Company agrees as an inducement to the undertaking of these services by you that
you shall not be liable for any error of judgment or for any loss suffered by
the Company in connection with any matters to which this contract relates except
that nothing herein contained shall be construed to protect you against any
liability by reason of willful misfeasance, bad faith or gross negligence in the
performance of your duties or by reckless disregard of your obligations or
duties under this contract.
Section 7. Multiple Capacities. Except to the extent necessary for
performance of your obligations hereunder, nothing shall restrict your right or
any of your directors, officers or employees who may be directors, officers or
employees of the Company to engage in any other business or to devote time and
attention to the management or other aspects of any other business whether of a
similar or dissimilar nature or to render services of any kind to any other
corporation, firm, individual or association.
It is understood and agreed that the directors, officers, agents,
employees and shareholders of the Company may be interested in your company as
directors, officers, shareholders, employees, agents or otherwise, and the
directors, officers, agents, employees and shareholders of your company may be
interested in the Company as a shareholder or otherwise.
Section 8. Concerning Applicable Provisions of Law, Etc. This contract
shall be subject to all applicable provisions of law, including, but not limited
to, the applicable provisions of the Act; and, to the extent that any provisions
herein contained conflict with any such applicable provisions of law, the latter
shall control.
The laws of the State of New York shall, except to the extent that any
applicable provisions of some other law shall be controlling, govern the
construction, validity and effect of this contract.
The headings preceding the text of the several sections herein are
inserted solely for convenience of reference and shall not affect the meaning,
construction or effect of this contract.
If the contract set forth herein is acceptable to you, please so
indicate by executing the enclosed copy of this letter and returning the same to
the undersigned, whereupon this letter shall constitute a binding contract
between the parties hereto, subject to approval provided for in Section 5.
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Yours very truly,
XXXXXXXX CONVERTIBLE FUND, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx
(President)
(Corporate Seal)
Attest: /s/ Xxxxxxx Xxxxxx
Xxxxxxx Xxxxxx
(Secretary)
XXXXX-XXXXXXXX MANAGEMENT
COMPANY
By: /s/ Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx
(President)
Attest: /s/ Xxxxxxx Xxxxxx
Xxxxxxx Xxxxxx
(Secretary)
(Corporate Seal)
